Soybeans, corn, wheat extend demand driven rally
Soybeans were higher on fund and technical buying, with November hitting a new two-year high and all contracts posting solid week to week gains. China bought 132,000 tons of 2020/21 U.S. beans Friday, the 11th business day in a row with an announced sale. That continues the hot start to the marketing year, which actually started last marketing year, and brings the running total to 4,275,500 tons. Contracts are overbought and while that was canceled out by demand, there could be a correction for beans in the near future. Planting is underway in Brazil and not far off in Argentina, with producers in both nations evaluating conditions and potentially switching acreage. Soybean meal was higher with unknown destinations buying 100,000 tons of 2020/21 U.S. soybean meal and bean oil was mixed, consolidating. The 2020/21 marketing year for soybean products starts October 1st.
Corn was higher on fund and technical buying, with December at a six-month high and cementing the very good weekly finish. China bought 210,000 tons of 2020/21 U.S. corn, having already passed the USDA’s estimate import estimate for China of 7 million tons for the entire marketing year. The total is even larger when accounting for new crop sales to unknown destinations. The spike in demand comes as China tries to bolster feed supplies while assessing typhoon damage to their domestic crop. Still, these sales will actually need to be delivered and it is very early in the marketing year. The trade is also watching weather, expecting harvest activity to pick up speed. The USDA’s weekly crop progress numbers are out Monday afternoon, quarterly stocks are scheduled for the end of the month, and new supply, demand, and production estimates are due October 9th. Ethanol futures were higher.
The wheat complex was higher on fund and technical buying, with strong weekly gains in the December contracts at the three U.S. exchanges. The trade is watching dry weather in Argentina, damaging that crop, and the Black Sea region, slowing down winter wheat planting for those key exporters. There are also concerns about dry weather in the U.S. Plains potentially limiting planted area. Paris milling wheat was higher heading into the session, aiding some contracts in pushing past what had been overhead resistance. The complex picked up additional support from better than expected export demand just over a quarter into the marketing year and the lower trend in the dollar, which helps U.S. goods compete on the export market. The supply outlook is bearish, with the USDA projecting a record world production and supply, but wheat currently has some pretty good momentum.